Feb 3 (Reuters) - In an unusually public split within the market-regulating U.S. Securities and Exchange Commission, one of its commissioners on Friday openly opposed the appointment of a new member to a separate panel that polices the corporate audit industry.

Saying the appointee lacks a record of investor advocacy, Commissioner Luis Aguilar charged the SEC with failing to meet its legal obligation in appointing, earlier on Friday, Jeanette Franzel to the Public Company Accounting Oversight Board.

A spokesman for the SEC had no immediate comment. Franzel could not immediately be reached for comment.

The SEC oversees the PCAOB, which Congress created, in 2002 after the Enron-era scandals, to regulate audit firms, including the Big 4 that dominate the audit industry: PricewaterhouseCoopers, Ernst & Young, KPMG and Deloitte.

Franzel’s appointment comes at a crucial time for the PCAOB. It is considering a set of sweeping auditor reforms that have followed on from widespread complaints about the performance of auditors in the 2007-2009 financial crisis.

Franzel is expected to cast a deciding vote on the five-member PCAOB board in dealing with the proposals.

She is now a managing director of the Government Accountability Office, the investigative arm of Congress, where she oversees audits of the federal government.

The SEC picked Franzel over another finalist who had been favored by some investor advocates, University of Tennessee accounting professor Joseph Carcello.

“My objection to this appointment is based on the fact that the commission must appoint individuals who have ‘demonstrated commitment to the interests of investors,’” Aguilar said in a statement. “This is not the case here.”

Aguilar said he reached that conclusion after reviewing candidates’ records and speaking with investors, academics, and members of Congress who supported the appointment of an investor advocate.

BOARD CONTROL LONG CONTESTED

The control of the PCAOB board has long been a subject of controversy. The Sarbanes-Oxley Act that created the PCAOB calls for two members to be certified public accountants, and investor advocates have long pushed for those positions to be filled by accountants with a history of promoting investor interests.

Franzel fills one of the two CPA slots, replacing Daniel Goelzer, whose term expired in October.

“Her unique qualifications are going to come because of her background at the GAO and its focus on fighting and detecting fraud,” said Brian Fox, founder of Confirmation.Com, a company that offers audit confirmation services.

“That’s what the PCAOB was put in place to do,” said Fox, who said he has worked with Franzel on fraud detection issues.

Created to combat accounting fraud after the Enron and WorldCom accounting scandals, the PCAOB replaced decades of self-regulation by the accounting industry.

Franzel has previously participated on a PCAOB advisory group as an observer.

Franzel’s record “was one in which she advocated strongly for the PCAOB to simply adopt standards the audit firms themselves had written,” said Lynn Turner, a former chief accountant at the SEC.

PCAOB Chairman James Doty said in a statement that Franzel’s “extensive experience in the field of securities regulation and auditing standards will enable her to hit the ground running.”

Under Doty’s leadership, the PCAOB has brought up for debate a number of audit reforms, such as requiring companies to change auditors after a set number of years. That idea has been vehemently opposed by the accounting industry and businesses alike.

The PCAOB is also considering whether to require more information in the audit opinions that back up the accuracy of companies’ financial statements, including the name of the person in charge of the audit.